Should you have a gift card/certificate program at your lodging?
Coming up with fun and unique gifts can be a challenge. When you add hundreds of destinations, the options are infinite. With the creation of Experiences (Airbnb) travel in the tourism industry, this might be the best time to introduce a gift card/certificate/e-card program to your revenue sheet. The trend is to give experiences instead of stuff this holiday season. Big hotel brands such as Ritz Carlton and Four Seasons have gift card and e-gift card programs that can be used for lodging or other amenities at their properties. Online travel agents, such as Booking.com, BedandBreakfast.com and Hotels.com, also have gift card programs that can be used at multiple properties listed in their networks. Even Airbnb has its own gift card programs.
Do gift card programs require a lot of administration?
The gift card/certificate world is definitely different for small lodging properties than for multi-million dollar hotel brands and online travel agents. The first obvious difference is that big properties are not going to hand craft and sign a paper gift certificate, they have a very sophisticated plastic and electronic card system. The 2nd obvious difference, in the State of Maine, is the liability the gift cards have. A company that sells over $250,000. is required to report any abandoned (non-used gift cards) to the State each year. The company is also required to pay the State 60% of the value of the cards not redeemed. Since, the gift card never expires, if after 2 years, the recipient of the card redeems it, the company is required to honor the card and then apply for a refund from the State Treasury Department. The tracking of the cards could be done by software and a merchant account. It is unrealistic to think a small lodging would sell the $250,000 value that would trigger a report. An Innkeeper would have to be mindful of the liability on the books and have careful tracking. The gift cards might not be redeemed for years after purchase.
What are the options?
If you have decided that you are on-board with the whole gift certificate idea, I suggest you forget the hand crafted traditional certificate and look into the gift card programs. You need to make a long-term commitment to this potential revenue stream and create a plan around it. Successful independent closed loop card programs take a lot of promotion and brain storming to be successful. Your guests need to be able to purchase cards or e-cards easily. A product category and possible e-commerce plug-in will need to be added to your website. Your booking engine should be able to accommodate point of sale items. You should be ready to display signage in the guest rooms, at the front desk and even possibly on the breakfast tables. A cost analysis of the program regarding fees and administration should be carefully considered. Adding one more administrative task to already busy Innkeepers, might be overwhelming. You could keep hand writing individual gift certificates, but keeping track of pieces of paper might be a challenge. Look into the card option. You will look professional and day-to-day management might be easier.
If the independent closed loop gift card system seems too difficult, you might want to try the network closed loop card options that are available through online travel agents. Online travel agents like BedandBreakfast.com can design marketing campaigns and present value added deals. Right now, if you buy a GetAway gift card from BedandBreakfast.com in the value of $250.00, you will receive another card for $75.00 in value (a 30% discount). Competitive sales tactics like this can be successful for large companies. A smaller property might not be comfortable offering a large discount, but as a member of a larger program, the discount is not a risk. As a participant of a network closed loop card, you agree to the terms and procedures of that program. As with all third-party vendors, there is a percent of value taken from sales. The participating lodging must honor the full face value but be ready to receive the face value minus the commission. For BedandBreakfast.com the commission is 20%. Another factor is, as of November 2015, a guest can only redeem up to $500.00 per reservation. This is good and bad. The redeemable value puts a limit on the commission-able reservation, but also may determine the guest’s length of stay. On the up side, there is a reward system tied into the BedandBreakfast.com partnership. If a participating lodging accepts over $1,500 worth of cards annually, that Inn will receive a rebate of 5% each year that offsets the commission. Member lodgings can also sell these network closed loop (bedandbreakfast.com) cards on their independent website for a 20% commission of the gift card sales. A participating lodging just needs to put a clickable badge on their website.
Everyone that accepts credit cards, can be a part of the open loop gift cards from Visa, MasterCard, Discover and American Express. Open Loop means to be accepted everywhere. Closed loop cards are store or network specific.
My advice is to educate yourself on the different programs out there. Anything that can generate a sale in the competitive world of lodging is worth considering. I, personally, love the idea that someone will wake up on Christmas day, unwrap one of the many getaway gift cards and start to plan an exciting journey. We spend our whole careers encouraging people to travel. The thought of empowering gift givers this holiday season with a simple plastic card to entice loved ones to act on their wanderlust, is a gift this Innkeeper treasures.